Fonterra has agreed to offload its New Zealand ice cream business Tip Top to Froneri in a deal worth NZD 380 million ($250.2 million).
Last December, Fonterra said it was considering the sale of the unit as part of plans to reduce its debt levels.
Tip Top, which was founded in Wellington in 1936, sells a range of ice cream bars, tubs and ice lollies.
Following completion of the deal, which is expected by the end of the May, the Tip Top name and its operations, including the Auckland-based factory at Mount Wellington, will be maintained.
Froneri, which describes itself as “the third largest” manufacturer of ice cream worldwide, is a UK-headquartered ice cream joint venture owned by Nestlé and R&R.
Ibrahim Najafi, Froneri CEO, said: “We have always admired Tip Top, which is an iconic brand in New Zealand with a long proud history and we are looking forward to welcoming the team into Froneri. Our vision is to build the world’s best ice cream company; an important part of our strategy is to develop local market successes and roll them out across our other markets.”
Commenting on future plans for the business, Kim Ballinger, managing director of Tip Top, said: “As part of the Froneri family we will benefit from Froneri’s scale and expertise, while continuing to maintain our commitment to our local heritage and our many loyal consumers in New Zealand and the wider Asia Pacific region. We’re all very excited about what the future holds.”
Tip Top produces a range of ice cream bars, tubs and ice lollies.
For the year ended July 2018, Fonterra reported a net loss of NZD 196 million ($128.5 million) – its first annual loss since its inception in 2001. The poor results prompted the firm to carry out a major asset review.
Fonterra CEO Miles Hurrell said: “We’ve signed an agreement with the new owners to supply milk which ensures that Fonterra farmers will continue to be part of the Tip Top story.
“We will also retain full global ownership of the Kāpiti brand and will be licencing its use for ice cream to Froneri. This means our popular Kāpiti cheese isn’t going anywhere. I get the strong connection New Zealanders have with Tip Top. It will be important for them to see that it’s in good hands.
“It’s been a privilege being the guardians of Tip Top, but it’s time to hand the baton to new owners. The well-loved brand needs continuing investment and focused ownership to be sustainable for generations to come. It’s not something we’re in a position to do right now.”
In recent weeks, Fonterra entered into a strategic alliance with The Coca-Cola Company that aims to capture opportunities in the growing dairy beverage category in Southeast Asia.
